Pre-Opening Wheat Market Report for 2/4/2011

March wheat was down 3 1/2 cents late in the overnight session. Outside markets are quiet. The market appears to have put in a near-term peak just as the temperatures put in a near-term low. Traders will closely monitor wheat weather in the US, China and Europe very closely in the next six weeks. The US and China crops are in poor shape right now, but good weather in late February and early March can make a big difference when the crops emerge from dormancy. March wheat closed 4 cents lower on the session yesterday after posting a new contract high. The reversal is seen as a negative short term technical indicator. However, the close was up 13 cents from the lows of the day, as the market saw a late burst of buying support. Ideas that the panic buying of the recent past has slowed and that the short-term supportive weather news may have peaked, coupled by slower than expected weekly export sales, helped to pressure the market early. However, forecasts for another blast of cold weather into the central US next week may have provided underlying support. A stronger US dollar helped to drive the market lower early in the as well, but buying emerged on the early sharp break, and a turn higher in soybeans and corn helped support the bounce. Ideas that some fields which were unprotected from the cold weather could see some winterkill damaged helped to support the market on the early sharp break. Weekly export sales came in at 534,100 metric tonnes for the current marketing year and 31,300 for the next marketing year for a total of 565,400. As of January 27th, cumulative wheat sales stand at 81.0% of the USDA forecast for 2010/11 marketing year versus a 5 year average of 81.3%. Sales of 377,000 metric tonnes are needed each week to reach the USDA forecast. News from the UN that their food price index hit a new record high in January and was up for the 7th month in a row plus talk that eventually Egypt may need to increase its import flow of wheat and food items, once workers return to ports and shops, lent support. The EU granted export licenses for 346,000 tonnes of soft wheat this week, which pushed the cumulative total for the marketing year to 12.6 million tonnes, up from 10.3 million last year. Traders see December 31st Canadian wheat stocks near 20.0-20.5 million tonnes as compared with 22.524 million last year.